Digital is Killing The Middle Class
In the previous two posts, I discussed the effects of digital products on the economy. When a digital product replaces a physical product, the result is lost resale opportunities plus the loss of supporting jobs.
These outcomes are after the fact, after the product has become digital. But digital also impacts jobs and the economy before the fact—in the digitalization of the processes that create physical products.
Digital does this in two ways: positively (decreased costs) and negatively (lost jobs). The latter is overwhelming the former. Why produce cheaper products if fewer people can afford them?
Machine production has a long history: from mechanization to automation to computerization to digitalization. Back when we were concerned about automation, we were told it would create more jobs than it destroyed. No one makes that claim anymore.
There are few manufacturing-related jobs where robots cannot replace people. However, the push for robots doesn’t end with the factories. Remember the Monty Python lumberjack song? Now, one robot logger performs the jobs of a whole gang.
Everyone has heard the adage about teaching a man to fish. Well, we’ve taught the robots how to fish. And if the fishermen are out of work, how can they buy the robot’s fish? Robots may be better than people for some jobs (speed, stamina, danger), but they don’t buy anything. The question is, who will?
As more production becomes digitized and more products become digital, the more jobs we lose. These days, the whole family must be breadwinners, no matter how small the crusts.
College used to be the entry to the middle class and above. Today, young people are going into debt for college degrees that land part-time jobs. They end up back home in their old room (or the basement)—if they’re lucky.
As the economy shrinks, so does the middle class—and vice versa. Products will continue to be made for those who can ante up. As fewer can meet the cost, fewer products will be made. This is the economic slippery slope from shrinkage to collapse.